Why are new products always very expensive when first released?

Why are new products always very expensive when first released?
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1 Answer

Answer :

Because the product is new, economies of scale haven’t been achieved yet. The manufacturer hasn’t figured out the most cost effective and efficient way of producing it in a large scale. Also, the product may initially be under patent protection, so the barriers to entry into the market will be higher for a potential competitor. And, under patent protection, the manufacturer may wish to recoup the R&D costs.
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